EDITIONS

Follow us

Canadian milk and milk products for sale in a grocery store in Caledon, Canada. The Trump administration has taken issue with Canada's dairy trade policies, a key point in talks between the U.S. and Canada in a potential rewrite of the North American Free Trade Agreement. | Cole Burston/Getty Images

Dairy continues to hold up U.S., Canada talks on NAFTA

The U.S. and Canada remain unable to reach agreement on opening up Canada’s dairy markets to American exports, which is delaying a potential NAFTA deal, White House chief economic adviser Larry Kudlow said Friday.

“The United States would rather have a trade deal with Canada, but it has to be a good deal. And the word that continues to block the deal is M-I-L-K,” Kudlow said on Fox Business.

Story Continued Below

Kudlow’s comments come as senior U.S. and Canadian officials continued talks on Friday with the aim of reaching a breakthrough before U.S. Trade Representative Robert Lighthizer is set to jet to Brussels on Monday for a meeting with EU trade commissioner Cecilia Malmström.

Canada’s dairy import restrictions have been one of the biggest sticking points in the U.S.-Canada negotiations, with President Donald Trump himself repeatedly saying he wants a better deal for U.S. dairy farmers. Canadian Prime Minister Justin Trudeau has said Canada has shown “a certain amount of flexibility,” but will protect its supply management system.

Meeting with reporters Friday, Trump reiterated his view that “NAFTA was one of the worst trade deals in history,” saying farmers in particular did poorly in the prior agreement. “We’re taking it out of NAFTA, doing a brand new trade deal,” he said. “Canada is moving along. We’ll see what happens.“

Trump added that “people have been saying, I’m too tough on Canada. Look, Canada has been ripping us off for a long time. Now, they’ve got to treat us fairly. I don’t want to do anything bad to Canada. I can, all I have to do is tax their cars, it would be devastating. ... I do use that as leverage in negotiating, where they don’t want to give us some points, I say, that’s OK, I’d rather tax your cars coming in, and I win a lot of points because of it."

Canadian Foreign Minister Chrystia Freeland maintained on Friday that Canadian negotiators “have continued to work hard with their U.S. counterparts today.”

“The atmosphere continues to be constructive,” Freeland said as she entered a meeting with Lighthizer. Freeland added that she would disclose more details after the meeting.

Kudlow did not rule out a deal being reached Friday, saying “I’ll give you a maybe. I know they’re working hard.”

Negotiators are pushing to wrap up a three-way deal by the end of the month in order to submit an agreement text to Congress that includes Canada. The White House notified Congress on Friday that it would sign a final agreement in 90 days with Mexico — with or without Canada on board.

But the talks with Canada are pushing up against other events on Lighthizer’s schedule — including the G-20 trade ministers meeting in Argentina on Sept. 14. It is unclear if Lighthizer would send another USTR official in his place for the meeting.

Mexican officials have also said they are ready to return to the U.S. to wrap up talks on trilateral issues once the U.S. and Canada have reached an agreement on bilateral issues.